In a bid to develop a new revenue stream from existing Millennial customers who may be looking to open their first investment account in a crowded online market, Wells Fargo & Co’s wealth management business said on Tuesday it would launch its new robo-adviser Intuitive Investor later this year.
The digital advice platform would be marketed to Wells Fargo customers who have savings and are comfortable taking big life steps online and will initially be rolled out to employees in the first half of 2017, said Devon McConnell, Wells Fargo Advisors’ head of digital and direct investing.
“We know that there are many customers ready to take an early step in their investing life, and for this population, a lot of things in their life happen online first,” McConnell said.
Similar technology has been deployed by independent firm Raymond James Financial Inc, which debuted its Connected Advisor in January and Wells Fargo’s competitor Bank of America Corp, which launched its Merrill Edge Guided Investing earlier this month and hence Wells Fargo is the latest Wall Street brokerage to join the robo-adviser party.
The robo-advisers have been made popular investing options and the traditional brokerages have been forced to rush in order to compete. Such robo-advisors have been made by companies like Betterment and Wealthfront and these use web-based platforms in order to provide automated investment advice to clients.
Primarily because a new U.S. Labor Department retirement regulation has boosted compliance costs for many wealth management firms, the robo-advisor has become popular with brokerages was well because the technology has allowed them to be able to serve clients at a lower cost.
Last year Wells’ employees were accused of opening as many as 2 million deposit and credit card accounts without customers’ permission in order to meet sales targets, and the firm is seeking to move on from that 2016 scandal. It is at such a juncture that the firm has opted to enter the robo-advising market.
Wells Fargo Advisors announced last year that a pilot version of Intuitive Advisor will be rolled out to Wells Fargo employees in the first half of this year and that it was partnering with technology firm SigFig to create its digital offering.
“We wanted to make sure we found the right partner and built the right technologies, and that takes time,” said McConnell of Wells Fargo’s timing. “We weren’t going to let anything else dictate a timeline to us.”
Engineers from both the firms were involved in collaboration for the creation of software that worked with the bank’s broader systems under the Wells Fargo Advisors’ partnership with SigFig, McConnell said.
McConnell said Intuitive Investor is one part of the bank’s broader technology investments even though the bank has not broken out how much it spent to create the robo.
(Adapted from Reuters)